Interviews

Former Best Buy CEO: Consumer Confidence Still Low

NEIL CAVUTO, HOST OF, “YOUR WORLD”: All right, now to the former CEO of Best Buy, Brad Anderson.

Brad, you’re hearing all this concern that people are getting antsy, they don’t know, they’re going to pull back. What do you think?

BRAD ANDERSON, FORMER CEO, BEST BUY: I think people are really stressed. And I think that’s part of what we are seeing in the -- we usually use consumer confidence as a huge indicator in terms of what is going on. And that’s a real rough number. And there’s no real sign of any kind of positive change right now in terms of -- I am not at Best Buy anymore, but in terms of what I see in other -- other parts of the market.

CAVUTO: Well, you do know a thing or two. And you built this giant to what it ultimately did. And you should be commended.

But you do know a thing or two about the American psyche and how long it lasts. I tend to think that when they see skittishness out there or they hear that there’s a lot of skittishness in the economy, they naturally hold back even if they’re in relatively good shape. Are we at that stage yet or what? What do you think?

ANDERSON: Well, I think we’ve been at that stage for a long time.

I think you saw in luxury spending that that has increased through the summer, because people who had the means were feeling -- they just got tired of not spending and were starting to spend. On the other hand, you see people who are really constrained in terms of their ability to spend have been very cautious, continuing to build up savings, et cetera. And now we’ve had -- with the roughness in the stock market we have seen recently, I think it’s still going to be a tough retail season. Back- to-school might be OK because customers have to buy things at back-to- school, but when there’s a discretion to purchase, I think people will still be pretty cautious.

CAVUTO: All right. So, the discretion to purchase is more hurt than the higher up the -- I guess food chain you go, right? So expensive flat- screen TVs are one thing. A cheaper, let’s say, boom box is another, but where do you think it lies for going into the holiday season? Forecast that.

ANDERSON: Well, I think we’ve got to see before -- we might have an OK holiday season because customers will -- the last year I was CEO of Best Buy was the year 2008, where we really got slammed. And December and the holiday season wasn’t as bad as the rest of the time around it or beforehand, for the same reason...

CAVUTO: That’s interesting.

ANDERSON: ... in terms of consumers being sort of in the market when they need to buy gifts, but, when they can pull back, pulling back in terms of spending.

I think before -- but it going to be a lagging indication. And when we start to see the economy grow again, it will be shortly after that we start to see consumer spending pick up. It when people start seeing other people getting hired at their jobs or asked to work more hours or have some discretionary money in their pocket, they’re going to start feeling better in spending. And there’s not a lot of signs of that going on yet in terms of what I can see.

CAVUTO: What could turn it around for you? I mean, do the markets have any effect, Brad? In other words, even if you are involved in the markets or not, I tend to think that because the media pounces on them so much, ourselves included, that when we have a nice string of them, people feel better. Is that true?

ANDERSON: Yes, those people that are in the markets sort of financially aware. Again, it’s -- it’s -- that is a section of the market that feels better.

CAVUTO: Right.

(CROSSTALK)

CAVUTO: But a lot of them are your buyers, right? I mean, they’re – they’re savvy buyers. They come to Best Buy for good deals on electronic and other items. That was the beachhead you helped build. Less so when they’re volatile?

ANDERSON: Significantly less so.

And the other thing about -- about like a Best Buy, Best Buy sells discretionary items. So, the average American has something like three televisions in the home. If they were thinking about four, they’ve really got to be feeling pretty good before the buy the fourth. So, we -- even with customers who can afford to buy it, you see constraints in terms of what their activity is.

And that is why that customer confidence indicator, the better that gets...

CAVUTO: Right.

ANDERSON: ... that will have a lot to do with what we see in terms of overall job growth and overall growth in the economy.

CAVUTO: We will watch closely.

Wise words, all, Brad Anderson, former Best Buy CEO, he’s the guy who really made that thing a powerhouse.

Brad, thank you very, very much.

ANDERSON: Thanks, Neil. Appreciate it.

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